Banking industry's wish list for Budget

Published: Sunday, February 17, 2008, 16:32 [IST]

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{image-business world pic copy01_17022008.jpg www.oneindia.com}New Delhi, Feb 17: What is the wish list of the Banking industry for the Bugdet? Such a list was presented by Chairman and Managing Directors of Public Sector Banks to Finance Minister P Chidambaram when he met them recently to solicit their views on Budget 2008-09. The import of the meeting was that never has Mr Chidambaram met Bank Chiefs exclusively on the issue of the Budget.

Broadly the suggestions made by Bank Chiefs related to the following subjects; Deductions on contributions towards recognised Provident Fund or Approved Supperannuation Fund; Deductions on contributions to approved gratuity funds in excess of 8.5 per cent per annum of salary; change in norms for provisions for bad and doubtful debts; Banks be granted exemption from TDS under section 196; problems pertaining to Fringe Benefit Tax (FBT) under Section 115 WB namely contribution to superannuation fund; and International transfer pricing regulations:exclusion of banks from the purview of certain sections.

In the case of deductions on contributions towards recognsied Provident Fund or Approved Supperannuation Fund the Banks wanted that the limit of 27 per cent prescribed under Rule 87 should be done away with for entities administering defined benefit schemes of pension, the terms of which have been approved by the government. The Bank Chiefs argued that taking into account the burden of pension liabilities under a defined benefit scheme, in the context of Accounting Standard (AS) 15 and increase in the life expectancy over the past 45 years from the time the Income Tax Rules 1962 came into effect, there was need to dispense with the limit.

Further, they said, the rules were framed in the past keeping in mind defined contribution schemes rather than defined benefit schmes. The defined benefits under the pension schemes administered by the PSBs are also cleared by the government and therefore there was a strong case for removing the ceiling of 27 per cent prescribed under Rule 87. The Banking industry wanted an amendment in Rules 103 and 104 of the Income Tax Act Rules allowing the employers to make ordinary or initial contribution to the Approved Gratuity Fund as required by Accounting Standard (AS)-15 and not restricting to 8.5 per cent of salary.